ACC 220 Study Guide - Fall 2018, Comprehensive Midterm Notes - Deutsche Mark, X86, Total Quality Management
ACC 220
MIDTERM EXAM
STUDY GUIDE
Fall 2018
08/23/2018 Lecture #1
Chapter One//Introduction to Managerial Accounting
• What is Managerial Accounting?
o Planning -> Controlling -> Effective decision-making
▪ Want a plan that’s consistently improving - deviation of any kind is bad
▪ Purpose of managerial accounting is to give all other business function
personnel accurate data/information to base decisions on
o Planning: to provide information for planning the organization’s actions
o Controlling: to provide information for controlling the organization’s actions
o Effective Decision-Making: to provide information for making effective decisions
• Financial vs. Managerial Accounting
o Financial:
▪ Historical information
• used for investment decisions, stewardship evaluation, monitoring
activities, and regulatory measures
▪ For external use
• primarily concerned with producing information for external users,
including investors, creditors, customers, suppliers, government
agencies, and labor unions
▪ Externally determined format
• must conform to certain rules and conventions defined by
agencies like the Securities and Exchange Commission (SEC),
the Financial Accounting Standards Board (FASB), and the
International Accounting Standards Board (IASB)
▪ Objective financial information
▪ Information about the firm as a whole
▪ More self-contained
o Managerial:
▪ Current or near current
▪ For internal use only
• Sharing this information is at least prohibited by the company, but
could be a criminal offense
• Protected because when given up, you are given up the
company’s competitive edge
▪ Internally determined format
• No mandatory rules
▪ Financial and nonfinancial information; subjective information possible
▪ Emphasis on the future
▪ Internal evaluation and decisions based on very detailed information
▪ Broad, multidisciplinary
• Business is constantly changing
o Changing uses
o Changing methods
▪ No longer collect data manually
o Changing users
▪ Previously only used by top personnel, now used by everybody within the
organization
find more resources at oneclass.com
find more resources at oneclass.com
• New Uses of Accounting Data
o New techniques for cost estimation
o Customer-focused initiatives (not product focused)
o Cross-functional analysis
▪ Place for other disciplines in business decisions - provides various
perspectives
o TQM (Total Quality Management) Implementation
▪ We want things done right and done right the first time
• Costing Methods
o Need: reliable, accurate, real-time product cost data
o Old methods: (product costing & process costing)
▪ Still commonly used but have some lag built into them - couple weeks
behind
▪ Costs allocated by quarters and years
▪ Assume monocultural production operations
o New Method: Activity-based costing (ABC)
▪ Can measure in real time and across multiple product lines
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
International accounting standards board (iasb: objective financial information, more self-contained. Internally determined format: no mandatory rules, financial and nonfinancial information; subjective information possible, emphasis on the future, broad, multidisciplinary. In managing the value chain, a managerial accountant must understand and measure many functions of the business (fin and non-fin: modern approaches to value-chain analysis may include: Initial design and engineering costs: manufacturing costs, costs of distribution, sales, and service, non-financial operational data, total quality management, continuous improvement/kaizen, continuous search, goal: incremental efficiency, goal: increased productivity, methods, reducing waste. Inquiring minds: customers, prospects, and managers: cost vs. Expenditure: cost: inventoriable, expense: non-inventoriable, expenditure: authorized, but not yet spent, accumulating costs, costs are accumulated through financial accounting, phone bill example: 200: assigning costs, costs are assigned to cost objects, assignment is concerned about the reason costs are incurred, accumulation is concerned with what costs are incurred, direct vs.
